C-P Slope budget up $600M
ConocoPhillips is ramping up its Alaska investments sharply.
The company increased its 2014 Alaska capital budget by more than 50 percent, to $1.7 billion, and will drill two new exploration wells this winter in the National Petroleum Reserve–Alaska, company spokeswoman Natalie Loman said Dec. 9.
Spending next year will be in projects that are expected to add about 54,000 barrels per day in new North Slope production by late 2017.
About 38,000 barrels per day would be produced by projects approved since the Legislature amended the state’s oil production tax last April. Loman said one development in the 2014 budget that is now under construction, the CD-5 project in the National Petroleum Reserve-Alaska, was approved by the company before state lawmakers made the tax change in Senate Bill 21.
“Alaska projects will get about $600 million more than in 2013, when our capital budget was about $1.1 billion, ConocoPhillips spokeswoman Natalie Lowman said. “Our capital spending next year will be more than double the $828 million spent on projects in 2012.”
The company’s 2014 capital budget was approved by its board and announced Dec. 6.
ConocoPhillips credited the state’s new oil production tax law, which goes into effect Jan. 1, for stimulating overall new investment.
“Higher allocation of capital to Alaska compared to 2013 reflected improved fiscal terms from passage of the More Alaska Production Act (SB 21),” the company said in a Dec. 6 press release.
While much of the 2014 budget is allocated to the CD-5 project, preparations on several other new projects are also underway, Lowman said.
The company has also authorized two new drill rigs to drill additional development wells in the Kuparuk River field since the passage of SB 21. One rig started work last May and the second is set to begin drilling in February.
CD-5 is expected to begin producing in late 2015 and is expected to produce about 16,000 barrels per day, or b/d. The project will cost about $1 billion and includes a bridge across a channel of the Colville River and new roads, pipelines and a production site on the west side of the river. CD-5 will be also the first commercial oil production project in the NPR-A.
ConocoPhillips is also laying gravel and making other preparations for a planned new drill-site in the Kuparuk River field, Drill Site 2S. Formal approval for that is expected in late 2014. Production is estimated at 8,000 b/d, starting in late 2015.
Permitting and other preparations are also continuing on GMT-1, a $900 million project in the NPR-A. It is expected to be producing 30,000 barrels per day by late 2017, Lowman said.
Overall, the new projects planned by ConocoPhillips are expected to add 54,000 barrels a day of new production by late 2017 but only part of this is net to ConocoPhillips because some of the new production will be shared with partners in the new projects.
ConocoPhillips owns 55 percent of Kuparuk, with BP, ExxonMobil owning most of the remainder, as well as 78 percent of CD-5 and GMT-1 with Anadarko Petroleum owning the remainder.
The two new NPR-A exploration wells are planned to be drilled in ConocoPhillips’ Greater Moose’s Tooth Unit in which the GMT-1 project is located, Lowman said. The drilling is aimed at establishing new resources in the unit. The company is planning a second NPR-A production project in the unit, GMT-2, sometime in the future, ConocoPhillips officials have said.
Overall, six exploration wells are now planned for the North Slope this winter. Two will be drilled by ConocoPhilllips; three by Repsol in the Colville River delta region and one by Linc Energy at Umiat, in the southeast NPR-A where a small oil field was discovered decades ago but not developed.
ConocoPhillips Alaska president Trond-Erik Johansen told the Resource Development Council annual conference in Anchorage in November that his company plans about $1.5 billion in new capital investments over the next few years.
Separately, BP has announced about $3 billion in new projects in the Prudhoe Bay field along with plans to put two new drill rigs to work in the field.